How do I apply for Trader tax status (TTS) using TurboTax?

[ebot]

Leonard, George, MilZero,

since 2021 (my first year trading real $$) resulted in losses approximately 20x the $3k loss deduction limit (without MTM status), a friend suggested looking in to filing as a partnership with my spouse and use a k-1 to allow us to flow the losses back to us.  While filing a partnership would be new to me on turbotax, it does seem doable.  Does that sound like a reasonable solution that could allow us take deductions on this large loss (quicker than 20 years at least)?

[GeorgeM777]

No, not for your $20,000 as those losses were incurred before you formed your partnership with your spouse.  As such, those losses remain with you as capital losses.  You are correct in that you can offset $3,000 of ordinary income with your capital losses (if you file MFS, your ordinary loss offset is $1,500) and carryover the remaining amount of losses to subsequent years.  However, you can offset your capital gains with your capital losses thus reducing the time it will take to fully extinguish your capital losses. 

@ebot

[ebot]

Thanks, George.

Actually the 2021 losses are about $60k (20 times the $3k limit).

Does this mean that hypothetically, I could deduct $3k of losses for 2021, and then if I had gains of $57k in 2022, I could deduct that full $57k in 2022? 

[GeorgeM777]

Yes, that carryover loss of $57,000 will offset the 2022 gain of $57,000.   Losses are applied in order so that long-term losses will offset long-term gains, and short-term losses will offset short-term gains.  Then, if there still remains a gain after the losses have been applied in the proper order, whatever losses remain (whether-short term or long-term) are applied against the remaining gain.  

@ebot

[ebot]

Wonderful. Thanks.

[gr8fuln8]

Immensely helpful.  Thank you for including an example statement of election.  Cheers!

[dc20222023]

TurboTax CD software download let you open each form but it only lets you enter/edit what you can enter/edit in the Turbo online version, and doesn't let you edit anything more

[dc20222023]

But TurboTax works like if gross receipt is less than home office (Box 30, rent, etc.), it will never let you write off the same year, it will always carryover to future years. Then how to do it as what you described. Thanks.

[Mike9241]

"But TurboTax works like if gross receipt is less than home office (Box 30, rent, etc.), it will never let you write off the same year, it will always carryover to future years. Then how to do it as what you described. Thanks." your statement question makes no sense in regards to how to apply for TTS. please clarify so humans can understand what you are asking.  

[dc20222023]

Found it here - How to claim home office expenses via a manual Schedule C adjustment

https://ttlc.intuit.com/turbotax-support/en-us/help-article/income/report-trader-activity-without-se...